Celsius Adjusted EBITDA Doubles in Q2: How Durable Are Cost Synergies?

Celsius Holdings, Inc. (CELH) reported a staggering 109% increase in adjusted EBITDA in the second quarter of 2025, reaching $210.3 million compared with $100.4 million in the same period a year prior. This significant growth was primarily driven by the strong performance of its recently acquired Alani Nu brand and operational efficiencies across the business.

The question of “how durable are these cost synergies” is central to understanding the sustainability of this metric. Celsius' management has a clear plan, expecting $50 million in run-rate cost synergies to be achieved in two years, following the Alani Nu acquisition. These synergies are already beginning to materialize with the company noting that Alani Nu’s gross margin improved sequentially, driven by a favorable product mix and cost efficiencies.

The company's overall gross margin of 51.5% for the second quarter remained relatively steady, supported by lower material costs, an improved price mix and a favorable channel and portfolio mix. However, it is important to note that the company anticipates margin pressure in the second half of the year due to expected higher input costs. While the initial signs of cost synergies are encouraging, the anticipated rise in input costs could serve as a test of how sustainable the company’s profitability gains prove to be in the coming quarters.

How PepsiCo & Coca-Cola Stack Up Against Celsius

PepsiCo (PEP) is also focused on cost optimization. With management expecting to deliver 70% more productivity in the second half of the year, PepsiCo is undergoing a multi-year effort to improve its cost structure. This strategic initiative for PepsiCo, which includes procurement savings, is aimed at reducing costs across its entire enterprise and sustaining profitability for the long term.

The Coca-Cola Company (KO) demonstrated comparable operating margin expansion driven by effective cost management. To optimize its product and pricing mix, Coca-Cola's strategy focuses on end-to-end revenue growth management capabilities. Coca-Cola’s approach highlights a broad, system-wide effort to grow transactions ahead of volume, a strategy that has consistently generated positive mix benefits.

CELH’s Price Performance, Valuation & Estimates

Celsius’ shares have gained 43% in a month compared with the industry’s 1% growth.

From a valuation standpoint, CELH trades at a forward price-to-earnings ratio of 47.82X compared with the industry’s average of 15.7X.

The Zacks Consensus Estimate for CELH’s 2025 and 2026 EPS indicates year-over-year growth of 55.7% and 27.4%, respectively.

Celsius sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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